Property Management Basics: Tips for Improving Tenant Retention
We all know that vacancies are costly. Every month that a property remains vacant takes money out of your pocket. You still owe property taxes, insurance premiums, and in most cases a mortgage payment, while there is no rent coming in to cover these expenses. Furthermore, every time a tenant moves out, you usually have to come out of pocket to re-paint the house and have the carpets cleaned or replaced, in addition to other miscellaneous repairs. The best way to avoid these costly intervals is through improving your tenant retention.
Here are some tips that may be helpful to keep your tenants renting your properties for the long term:
Select good tenants to begin with.
This may seem obvious, but the typical temptation is that after your property has been sitting vacant for a month, you’re willing to let almost anyone rent it, even if they do have some problems with their credit report, etc. What is important to remember is that it is much better to wait another month to rent to a highly qualified tenant that will, at the very least, fulfill their rental agreement with you, then to have the less qualified tenant break the lease and move out after four months, or worse, need to be evicted by you. By having highly qualified tenants rent your properties, you significantly increase the odds of them fulfilling the lease and hopefully renewing it for another term.
Provide your new tenants with a helpful welcome packet.
Your goal as a landlord is to establish a positive relationship with your tenants from the very beginning. This starts with making their move-in as smooth and pleasant as possible. One of the things that you should do is to provide them with a welcome packet. It should have information about the property and how they can contact you for maintenance requests and other issues. It can include pertinent information like telephone numbers for the local utility companies, schools, public services, etc. It should also include entertainment and dining information about their new community. A nice touch would be to throw in some coupons for a few local restaurants.
Keep your rent slightly below market.
When it comes time to renew a lease, you might want to consider not raising the rent to the full market value. If the rent should go up by $30, consider raising it only $10. If you raise the rent too much all at once, your tenants may move out in search of a cheaper dwelling. But, if your rents are a little below the market value, then restless tenants will be less likely to move when they see that they actually are getting a good deal compared to what other properties are renting for. Of course, if your market is slow and rents really haven’t gone up that much, then don’t raise rent that year.
Respond promptly to tenant maintenance requests.
Make sure that you have a solid system in place for responding to tenant’s maintenance calls. Even if they are requesting a frivolous repair that you are not going to do, it is still very important to call them back promptly and to politely explain your policy on that item. For emergency repairs, time is of the essence, so make sure that if you are handling the property management yourself that you get your messages regularly and already have repair people lined up to deal with these sorts of situations. If you aren’t that good at following up and staying on top of tenant requests, I would strongly suggest hiring a professional property management company to handle this for you.
Maintain positive contact with your tenants throughout the year.
Again, your goal should be to foster a positive landlord-tenant relationship. This can include things like sending out “season’s greetings” cards during the holidays to your tenants. You should also do a semi-annual inspection of the property with your tenant and use this opportunity to get up to date with your tenant and their life. If you show genuine interest in your tenants and are accessible like this, they will be more likely to come to you with potential problems they may be having with your rental, instead of just moving out because they have no personal contact with you.
Overall, there is no magic bullet to procure and produce long-term tenants. However, you can apply some of these common-sense measures to increase the odds that your tenants will remain in your properties for a good, long time.
For help managing your rentals, please see our free property management forms on the Real Estate Investor Wiki for our Real Estate Investor Bronze Members.
Until my next post,
James
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